All of the Following Statements About Sticky Prices Are True

question 17

Multiple Choice

All of the following statements about sticky prices are true except:

• A) in the short run, some wages and prices are sticky.
• B) the sticky-price model describes the equilibrium toward which the economy slowly gravitates.
• C) for studying year-to-year fluctuations, most macroeconomists believe that price stickiness is a better assumption than is price flexibility.
• D) magazine publishers tend to change their newsstand prices only every three or four years.

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Definitions:

U.S. GAAP

Generally Accepted Accounting Principles in the United States, a framework of accounting standards, principles, and procedures.

Current Liabilities

Short-term financial obligations that a company is expected to pay within one year or one operating cycle, whichever is longer.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity levels for operating needs.

Total Assets

The sum of all assets owned by a company, indicating the total resources at its disposal.